§ Mr. Fieldasked the Secretary of State for Social Services how many low-income families were subject to a marginal tax rate of (a) over 100 per cent., (b) 75 to 99 per cent. and (c) 50 to 74 per cent.; taking into account loss of means-tested benefits, in 1976, 1977 and 1978.
§ Mrs. ChalkerThe table below sets out the estimates as at December 1976 of the numbers of families who were then theoretically subject to marginal tax rates of 50 per cent. And above. Exterme caution should be exercised in any use of these estimates.
215WEstimates such as these are theoretical because they assume that all means-tested benefits are reassessed immediately on receipt of a £1 pay rise; this would not happen in practice, since benefits such as family income supplement are awarded for 52 weeks irrespective of subsequent changes of circumstances. The figures are therefore liable to mislead. My Department has never, in fact, seen an authenticated case in which a marginal tax rate of 100 per cent. or more has actually operated.
I will circulated in the Official Report the corresponding estimates for 1977 as soon as current work on them has been completed. Those for 1978 will not be available until next year but it can be said that only families with three or more children both liable to tax at the basic (33 per cent.) rate and entitled to small amounts of family income supplement continued to be theoretically subject to marginal tax rates of 100 per cent. and above. Their number is estimated to be considerably fewer than 5,000.
NUMBER OF FAMILIES THEORETICALLY SUBJECT TO MARGINAL TAX RATES OF 50 PER CENT. OR MORE Great Britain, December 1976 Range of marginal tax rates (per cent.) Number of families theoretically affected 50 but less than 75 240,000 75 but less than 100 [30,000] 100 and above 50,000 Notes on the table
1. The estimates in the table, which are rounded to the nearest 10,000, are based on a Department of Health and Social Security analysis of incomes and other information recorded by respondents to the 1976 family expenditure survey. They are subject to sampling error: the figure in square brackets in particular is subject to considerable proportionate sampling error.
2. Only the population living in private households is covered; institutions etc., are not included in the samples for the family expenditure survey.
3 Higher rate taxpayers have been excluded from the table.